Mongolia signs cooperation deals with North Korea

By bne IntelliNews October 30, 2013

bne -

Mongolia signed off on a raft of cooperation agreements with North Korea on October 29. The Central Asian state eyes its reclusive neighbour as an aid to improving energy security and diversifying market reach for its growing mining output.

Mongolian President Tsakhia Elbegdorj has signed several agreements including a pact on cooperation in the industrial and agricultural sectors, during a visit to Pyongyang. Elbegdorj, who arrived in the North Korean capital on October 28, was the first foreign head of state to meet with the country's new leader Kim Jong Un.

According to the Mongolian presidential website, agreements were also signed on cooperation in the roads and transport sector, as well as culture, sport and tourism. A 2013-15 cooperation plan between the Postal Authority of Mongolia and the North Korean Computer and ICT Centre, has also been sealed.

The Mongolian delegation included Mongolian foreign minister Luvsanvandan Bold and industry and agriculture minister Khaltmaa Battulga.

Mongolia currently enjoys relatively good relations with North Korea, given the latter's status as a pariah state. In March, Ulaanbataar offered to help broker a solution between North and South Korea after Pyongyang said that it was in a state of war with the south.

Three months later, the announcement that Mongolian oil trading and processing company HBOil had bought a 20% stake in the operator of North Korea's Sungri refinery surprised many. HBOil said at the time that the plan is to supply crude oil to the state-controlled refinery for processing, then re-import the products, in an attempt to reduce Mongolia's reliance on fuel exports from Russia.

Relations between Ulaanbaatar and Pyongyang have fluctuated since the end of the Cold War, when Mongolia has embraced the free market and diplomatic reforms. North Korea suspended diplomatic relations in 1999 when South Korean President Kim Dae Jung visited Mongolia, but ties were later restored.

Mongolia has several times supplied food aid to North Korea in recent years. Meanwhile, somewhat ironically, it's the potential access to international markets that cooperation with the closed-off country could offer that is enticing Ulaanbataar.

The two countries are already linked by a rail line connecting Mongolia to the port of Rason. Officials involved in the HBOil deal told bne in July that access to international shipping lanes via North Korea could soon expand. That would offer Mongolia's growing minerals output reach to new markets. Currently China consumes more than 90% of the country's mineral exports, but with the giant's growth slowing, access to Japan, South Korea and India would hedge Mongolia's risks.

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